I received a call from an anonymous lady 2 days ago. I was having a meeting that day and hence not able to talk with her for long. I can't remember her name now but she sounds helpless, disappointed and angry.
She complained to me about her Relationship Manager from one of the bank who sold her an ILP from Company "Z". The RM emphasized that it is a saving plan which she can stop contribution after 18 months and she guarantees a profit because company "Z" gives her XX% bonus units in the initial 12 months. She was thrilled with the bonus units and faithfully put the money over the next 2 years and was satisfied with the returns based on the monthly statements she received.
She probably needs the money and need to partially surrender the cash value. She was horrified to find out that she will be losing tens of thousand of money if she surrender it now as the initial 18 months of premium can only be taken on maturity. She don't know that there is a surrender penalty on this 18 months premium. She thought that the surrender value is based on the monthly statements she received.
She tried to look for the RM and the RM is no longer working in the bank. She looked for company "Z" and they refuse to get back to her, but pointing fingers back to the bank. She was very confused and managed to find my blog and seek me for advice.
I observed a few half truths here
a) Half Truth (1) - This is a Saving Plan...
The RM probably kept emphasizing on "Savings" instead of "Investment" during the presentation. Nothing really wrong with that but consumers may think that they will get a fixed yield on maturity when you emphasize "Savings". If it is an investment plan, tell them so and the risk involved in it.
This "V"plan can be rather confusing to the client because there is a maturity term when most investment plan do not specify a maturity.
b) Half Truth (2) - Can stop contribution after 18 months...
Its true that she can stop contribution after 18 months but she must be made aware on the implications if she is to stop the investment after 18 months or if she surrender the plan after that? There are people recommending this plan as if it is an 18 months savings plan. Some of them may not even remember that there is actually a maturity date which can be 20 or 25 years later.
c) Half Truth (3) - Conflicting Statement on Investment Value...
The monthly statement company "Z" sent shows the exact value of the investment with the bonus units given. They did not show their client that the initial 18 months contribution cannot be withdrawn and be subjected to a very heavy penalty if they surrender before maturity.
The client must be made aware that the surrender value is different from the statements that they see monthly. The surrender penalty is based on a rather complicating formula which client will find it hard to understand...
Poor lady. She don't have a personal financial adviser and the RM had left the bank. I believe that she had put in several thousands every month for this plan and must be really upset to know that the money she see in her monthly statement are not the money that she can take and use today like a normal investment plan.
Saturday, July 18, 2009
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3 comments:
It take two hands to clap. The RM must be willing to tell lies while the prospect must be greedy ("attracted" to bonus units) and sign on the benefit illustration blindly when the BI clearly shows hefty penalty for early surrender.
It is impossible clap hands unless there are two. Thus, as long as the market continues to have RMs as liars and prospects who are greedy and/or blind, mis-selling will always continue to take place.
As for what MAS is doing? MAS was dead long ago, they can't even clap any hand.
This is what happens when the govt brings in foreign talent. Being talented they can concoct complicated yet legal concoctions for our consumption. Being foreign they don't have to be around to pick up the pieces and have no qualms about wrecking the place. Don't just blame the RM. Who in the right mind would want to lock his money for years just for that dubious few percentage points that may not even cover inflation. The whole thing is a scam right from the start. Think of all those foreign financial CEOs that came in and the shit they have or going to leave behind. Then we start blaming the ikan bilis for this and that. What can the ikan bilis do? Tell everything and end up like you so little business? Struggling to make ends meet? They don't want to end up crying outside Ma Kuang in middle road. They want to drive big cars and impress the PRC girls what. So what to do, let's move on...
So typical of Singaporean. Blame "foreign talent".
Nothing in the posting to indicate nationality of the RM yet you post here like got first hand knowledge.......
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